Be dazzled: As you walk through the door of an Arthur Kaplan store. Picture: Supplied
Be dazzled: As you walk through the door of an Arthur Kaplan store. Picture: Supplied

As you walk through the security door of an Arthur Kaplan store, you can’t but be dazzled by the bling on display: rings, watches, bracelets and necklaces.

That you’re there to part with some serious cash on Omega, TAG Heuer or Rolex watches is clear, hopefully, for owner Taste.

But just how lucrative is the jewellery business in SA? This is the question, especially now that Taste Holdings — a company once synonymous with some of the fastest-growing fast food brands in the country — has staked its future on this segment of retail instead.

Taste abandoned its food service ambitions in 2019 as it buckled under the financial strain of trying to roll out international brands Starbucks and Domino’s. The rights to Starbucks were sold, followed swiftly by Maxi’s and the Fish & Chip Co — businesses on which Taste built itself into a listed contender against Famous Brands and Spur.

Now, instead, its competition are the likes of Browns, high-end jewellery outlet Charles Greig, TFG’s American Swiss and Sterns, and, in Johannesburg, bespoke jewellery maker Tinsel.

Perhaps it’s the growth posted by American Swiss that provides a convincing picture of jewellery retail: a 6.4% rise in turnover in SA under TFG in 2019.

But getting a clear picture of the size of the jewellery market is frustratingly difficult — even the Jewellery Council of SA says it does not really know how big this sector is. That’s partly, it says, because the sector is heavily dependent on a fluctuating tourist market.

In Taste’s most recent set of annual results for the year, to February 2019, the luxury division posted a 12% drop in revenue, to R490m. Excluding one-off costs related to restructuring and depreciation, as well as some Arthur Kaplan and NWJ store closures, operating profit was just R1m, from R16m the year before.

Predictably, "value for money is becoming a key driver of buying behaviour", says Taste. "Shoppers are increasingly looking for good deals, or waiting for sales before making their purchase decisions."

Still, then CEO Dylan Pienaar, who stood down in November after Taste changed course, said there was "appetite" for its Swiss watches, sold under its World of Watches brand.

Pienaar was replaced by Duncan Crosson, who had been head of the luxury goods division, in early December.

Taste isn’t alone in trading in an unforgiving market. Local jewellers, especially, are finding it tough going. Tinsel co-owner Eric Loubser says: "Local production has shrunk immensely. Overregulation [and] a lot of bureaucracy, [make] it quite difficult to be a jeweller in this country."

What’s more, he says: "You don’t get a lot of consumption due to quality. You get a lot of consumption due to name."

In theory however, that should favour the mass-market players, like American Swiss, Arthur Kaplan and NWJ.

Taste’s biggest investor, Sean Riskowitz, says he remains hopeful that the luxury division will bring some positivity, especially this festive season. "You would think that at this stage, with the economy under pressure, people wouldn’t be buying luxury [items]. But ... people love to spoil other people ... especially at Christmas," he says.

Taste has had a brutal year on the JSE: its shares now trade below 5c each — a merest fraction of their record highs of R5.25.

Riskowitz is clearly dismayed by the slump.

"I am a little surprised by the share price. Previously, it was obviously negative for the share price that food was losing money on a net basis and a big capital requirement was needed to continue to fund food and build stores," he says.

Small cap analyst Anthony Clark maintains that the only course of action is to delist. "It is going to be virtually impossible for [the company] to raise money in the short to medium term," he says.